Stock Analysis
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- Water Utilities
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- NasdaqGS:ARTN.A
Artesian Resources' (NASDAQ:ARTN.A) earnings growth rate lags the 14% CAGR delivered to shareholders
It might be of some concern to shareholders to see the Artesian Resources Corporation (NASDAQ:ARTN.A) share price down 11% in the last month. But over three years, the returns would have left most investors smiling To wit, the share price did better than an index fund, climbing 36% during that period.
In light of the stock dropping 9.5% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.
View our latest analysis for Artesian Resources
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Artesian Resources was able to grow its EPS at 6.6% per year over three years, sending the share price higher. In comparison, the 11% per year gain in the share price outpaces the EPS growth. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Artesian Resources' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Artesian Resources, it has a TSR of 47% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's good to see that Artesian Resources has rewarded shareholders with a total shareholder return of 32% in the last twelve months. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 8% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Artesian Resources better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Artesian Resources you should be aware of, and 1 of them is a bit concerning.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
What are the risks and opportunities for Artesian Resources?
Artesian Resources Corporation, through its subsidiaries, provides water, wastewater, and other services in Delaware, Maryland, and Pennsylvania.
Rewards
Price-To-Earnings ratio (28.9x) is below the Water Utilities industry average (35.8x)
Earnings have grown 5.7% per year over the past 5 years
Risks
Debt is not well covered by operating cash flow
Further research on
Artesian Resources
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NasdaqGS:ARTN.A
Artesian Resources
Artesian Resources Corporation, through its subsidiaries, provides water, wastewater, and other services in Delaware, Maryland, and Pennsylvania.
Proven track record average dividend payer.
